PepeFi
TOWARDS A MORE EFFICIENT NFT LENDING MARKET
Market Background
Most current implementations of NFT lending vault aren’t realistic. They assume that lenders have zero risk appetite and that borrowers are perfectly rational.
Thus, they liquidate borrowers and focus on small returns for LPs marketing as no risk passive yield
However, this cannot be further from the truth.
Borrowers don’t want to be liquidated and repay their loans >50% of the time even on negative equity. Lenders are willing to take this risk for a set duration, and earn better than anything else in the market despite this risk.
Loan Landscape
NFTFi integrates these dynamics perfectly and thus keeps on growing.
NFTFi’s growth has been extremely positive for the entire space as they add liquidity to the market.
A few lenders are responsible for most of the liquidity. However, they have limited liquidity and focus differently. Thus assets are often priced unfairly for both borrowers and lenders in terms of risk.
PepeFi
PepeFi allows lenders to take a loan on an NFT or an NFTFi loan thru a vault whose creators determine APR, LTV and supported collections during inception.
LPs back these strategies till the Vault expiration – which defaults to 2 Months on the UI. After Expiry, PepeFi auctions defaulted loans in a dutch auction.
Depending on the risk profile of LPs, various Vaults can provide loans on different LTVs and APRs simultaneously. When borrowers come, they see the best offer for their NFT.
Dynamics
PepeFi creates powerful dynamics solving most of the problems today.
It provides the wider ecosystem access to the lucrative NFT lending market. At the same time, PepeFi creates competition among Vault Creators and LPs, making the Market more efficient.
Providing liquidity to NFTFi lenders further increases liquidity in the Market, helping to make NFT Financialization happen.
As most loans in NFTFi are below the LTV, PNNFTFi loans create exciting dynamics. A Vault with a 60% LTV might provide a lender a 1X leverage loan if their current LTV is 60%. Also, as this is effectively a PUT option for the lender, this opens many doors.
Future
A minimal incentive must be set up for vault creators for reputational reasons.��The current version was implement in 10 days. The contracts and UI need to be tested further with more test cases, fixes and optimization. NFTFi has a well-tested settlement layer that can be used for handling ERC721 loans.
In the long run, An entire pepe ecosystem can be built on top of PepeFi. A protocol to manage liquidity position automatically based on pricing models and/or creator reputation can be the first.
A discussion forum connected with PepeFi will help borrowers and creators better understand each other and their strategies. The forum can be linked within the Vault.
Links
Video Demo��Rinkeby Deployment (Make sure to have Paradigmn NFT or its promissory note and connect to Rinkeby)�